review from the Iowa Court of Appeals.
from the Iowa District Court for Woodbury County, Jeffrey L.
seeks further review of court of appeals decision affirming
district court ruling that corporation could not claim
family-member exception to employee-numerosity requirement in
Iowa Civil Rights Act.
F. Pohren and Aaron F. Smeall of Smith, Slusky, Pohren &
Rogers, LLP, Omaha, Nebraska, for appellants.
Denne and Stanley E. Munger of Munger, Reinschmidt &
Denne, LLP, Sioux City, for appellee.
appeal, we must decide whether a small business that
incorporates thereby loses the family-member exception to the
employee-numerosity requirement in the Iowa Civil Rights Act
(ICRA). The ICRA does not apply to "[a]ny employer who
regularly employs less than four individuals. . . .
[I]ndividuals who are members of the employer's family
shall not be counted as employees." Iowa Code §
216.6(6)(a) (2011). The plaintiff worked at a small
insurance agency and alleges she was sexually harassed by her
supervisor, the sole owner's husband. The defendant
insurance agency, a subchapter S corporation, employed the
owner and her husband, niece, and grandniece, as well as the
plaintiff and another nonfamily member. The employer moved
for summary judgment on the ICRA claims on grounds that it
employed fewer than four individuals (not counting the family
members). The district court denied summary judgment on that
ground, ruling that a corporate employer is ineligible for
the family-member exception. We granted the employer's
application for interlocutory appeal and transferred the case
to the court of appeals, which affirmed that ruling. We
granted the employer's application for further review.
that a corporation does not have family members and therefore
cannot qualify for the family-member exception in section
216.6(6)(a). Accordingly, for the reasons explained
more fully below, we affirm the decision of the court of
Background Facts and Proceedings.
Georgesen started a small insurance business named Derby
Insurance Agency (Derby), a subchapter S corporation, in
1991. She is the sole shareholder and president of Derby,
which is located in Sioux City. Patricia married Kevin Dorn
in 2000 and changed her last name to Dorn. Both of them
worked at Derby selling insurance. Kevin served as a manager
Cote began working for Derby as a customer service
representative on May 6, 1998. She also performed
administrative tasks, such as reconciling Derby's bank
statements, ordering supplies, and training new employees.
Cote considered both Patricia and Kevin to be her bosses. In
2003, Cote was promoted to office manager.
November 2010 to October 2012, Derby employed the Dorns,
Cote, and Patricia Strawn, who is Patricia Dorn's niece.
Derby also employed Scott Delperdang until February 2012.
After he left, Derby hired Candice Hunter, who worked for
Derby until October 2012. Additionally, Jasmine Derby,
Patricia Dorn's grandniece, worked part-time at Derby
during the summer of 2012 to help with filing. During the
eight weeks she worked there, Jasmine averaged twelve hours
weekly. She was paid $10 per hour.
October 10, 2012, Derby sold its assets, goodwill, and book
of business to Derby Insurance Services, Inc. (Services).
Derby ceased operating as an insurance agency. Cote began
working for Services and continued to do so until March 19,
2014. Patricia Strawn also began working for Services and
became the office manager.
filed a complaint of discrimination with the Iowa Civil
Rights Commission (ICRC) on April 10, 2013. Cote alleged that
Kevin sexually harassed her and other female colleagues over
a seven-year period. The ICRC issued Cote an administrative
release on January 10, 2014. Cote filed a petition in
district court on April 7, 2014, naming Derby and Kevin as
defendants. Cote alleged claims for sex discrimination based
on a hostile work environment under the ICRA, Iowa Code
chapter 216. Cote later filed a motion to amend, ...